What I like in his message is he fully understands that hiking the deficit is not the answer because it will make problems down the road even bigger. Moreover, “down the road” is closer than anyone thinks.

Wiedemer advocates lightening up on stocks and buying gold, the latter because of QE. This has been my position as well.

Here are a few snips from the article …

“I think recession is (inevitable), but you can avoid it,” Wiedemer says in the attached video. “The way to avoid a recession now is to increase that deficit, just like we did before. If we take that deficit from $1 trillion to $2 trillion you’d find we would be out of the recession” and everything would get turned around, including the housing and job markets.

As Wiedemer points out, there are already signs of QE3 fatigue, brought on in part by a “700% increase in government borrowing since 2007” in an economy that’s already starting to slow down on its own. Add in headwinds from the global slowdown and he says it’s clear, “we’re facing a lot of problems down the road.”

To be fair, he does not see a washout type recession but rather a more mild one, helped (temporarily) by QE3, but that’s not without concern. ”When you start telling everybody that you’re going to print money forever, I think it gets people worried that we really will get inflation,” he warns.

As for avoiding a dip into the fiscal red sea, that will take an act of Congress. And failing that, Wiedemer says, investors would be wise to reduce exposure to stocks and hang on to a little gold.

Mild Recession?

I think the recession has already started, but in terms of job losses I believe like Wiedemer that it could be mild. My reasons, not discussed in the article or video, are three-fold.

Corporations are already running pretty lean and may not be able or willing to fire as many workers as necessary to maintain profit forecasts

Corporations are already turning away from full-time employment to part-time employment so there is likely to be a reduction in hours rather than mass layoffs, especially in retail jobs

Housing starts and new home sales are bottoming and will likely be a positive contribution to GDP